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Disclaimer Based Upon Insured’s Non-Cooperation Was Timely—Must Allow Longer Period to Demonstrate Diligence In Seeking Cooperation

In a full-fledged opinion by Judge Pigott, the Court of Appeals determined that the insurers disclaimer based upon the insured’s failure to cooperate with the investigation was timely and enforceable:

The question whether an insurer disclaimed as soon as reasonably possible is necessarily case-specific. In some cases, very different from this one, the justification for disclaimer is “readily ascertainable from the face of the complaint in the underlying action” … or “all relevant facts supporting . . . a disclaimer [are] immediately apparent . . . upon . . . receipt of notice of the accident” … . In such cases, a disclaimer must be made rapidly. The present appeal, on the other hand, involves disclaimer for noncooperation by an insured. A determination as to whether such a disclaimer was made within a reasonable time is more complex because “an insured's noncooperative attitude is often not readily apparent”… . We have emphasized that “insurers must be encouraged to disclaim for noncooperation only after it is clear that further reasonable attempts to elicit their insured's cooperation will be futile” … .The primary reason that we allow a longer period for disclaimer for noncooperation lies in a well-established principle of our case law, which is intended to facilitate the full compensation of injured victims suing for damages. This is the requirement that an insurer may not properly disclaim for noncooperation unless it has satisfied its burden, described in the precedent as “a heavy one indeed,” of showing “that it acted diligently in seeking to bring about the insured's co-operation; that the efforts employed by the insurer were reasonably calculated to obtain the insurer's co-operation; and that the attitude of the insured, after his co-operation was sought, was one of willful and avowed obstruction”… . Country-Wide Insurance Company v Preferred Trucking Services Corp, 21, CtApp 2-18-14

 

Reversing Its Prior Decision in this Case, the Court of Appeals Determined the “Servidone” Rule Is to Be Followed in New York/An Insurer Which Has Breached Its Duty to Defend the Insured May Rely On Policy Exclusions to Escape Its Duty to Indemnify the Insured

In a full-fledged opinion by Judge Smith, over a dissent, the Court of Appeals reversed itself on reargument and adhered to precedent—Servidone Const Corp v Security Ins Co of Hartford, 64 NY 2d 419. Under Servidone, an insurer which breached its duty to defend can still rely on policy exclusions to escape the duty to indemnify:

In Servidone — a case in which, as in this one, the insurer was relying on policy exclusions in defending against a suit for indemnification — we stated the question as follows:

“Where an insurer breaches a contractual duty to defend its insured in a personal injury action, and the insured thereafter concludes a reasonable settlement with the injured party, is the insurer liable to indemnify the insured even if coverage is disputed?”… .

We answered the question in Servidone no. In K2-I [the initial ruling in the instant case], we held that “when a liability insurer has breached its duty to defend its insured, the insurer may not later rely on policy exclusions to escape its duty to indemnify the insured for a judgment against him” …. . The Servidone and K2-I holdings cannot be reconciled. * * *In short, to decide this case we must either overrule Servidone or follow it. We choose to follow it. K2 Investment Group LLC v American Guarantee & Liability Insurance Company, 6, CtApp 2-18-14

 

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County Could Not Shift Obligation to Pay Property Tax Refunds to Taxing Districts

In a full-fledged opinion by Judge Abdus-Salaam, which includes extensive historical, theoretical, constitutional and statutory discussions of the issues involved, the Court of Appeals determined Nassau County could not shift its obligation to pay real property tax refunds from the county to its individual taxing districts. The county’s attempt to supersede a special state tax law exceeded its statutory and constitutional authority:

As limited by the State and Federal Constitutions' protection of individual rights and restriction of State power, the State Constitution establishes the State government as the preeminent sovereign of New York, and the three coordinate branches of the State government may exercise the entire legislative, executive and judicial power of the State, as entrusted to them by the people … .Given that the authority of political subdivisions flows from the State government and is, in a sense, an exception to the State government's otherwise plenary power, the lawmaking power of a county or other political subdivision “can be exercised only to the extent it has been delegated by the State”… .. Furthermore, because the Constitution expressly imbues the State government, rather than any locality, with “[t]he power of taxation” (NY Const art XVI, § 1), State law governs the tax field unless the State Legislature or the Constitution unambiguously delegates certain taxation authority to a political subdivision… . Matter of Baldwin Union Free School District v County of Nassau, 9, CtApp 2-18-14

 

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No Prejudice from Loss of Hand-Written Police Report (Rosario Material)/Trial Judge Did Not Abuse Discretion In Denying Request for Adverse Inference Jury Charge

In a full-fledged opinion by Judge Read, over a dissent, the Court of Appeals determined the trial judge did not abuse his discretion by failing to give the adverse inference charge with respect to a hand-written police report (“scratch 61”) which could not be located. The opinion explains the history of the sanctions appropriate when Rosario material is not turned over to the defense. With respect to nonwillful loss or destruction of Rosario material, the court explained the defendant must demonstrate prejudice, not demonstrated under the facts here:

…[O]ur rule is clear: nonwillful, negligent loss or destruction of Rosario material does not mandate a sanction unless the defendant establishes prejudice … . If prejudice is shown, the choice of the proper sanction is left to the sound discretion of the trial judge, who may consider the degree of prosecutorial fault … . The focus, though, is on the need to eliminate prejudice to the defendant … . Here, defendants did not establish prejudice, as is their burden. Defendants fault the trial judge for not analyzing prejudice when he denied their request for an adverse inference charge, but they did not even mention the word. … The judge essentially (and correctly) ruled that inadvertent loss alone was insufficient to require a sanction. Of course, it is difficult to imagine how defendants might have been prejudiced by the loss of the scratch 61, as the defense attorneys and the judge all no doubt knew. A scratch 61 is a handwritten complaint report that [was] placed in a bin for typing, likely by a civilian employee of the police department. Defendants were provided the typewritten complaint report, which would have differed from the scratch 61 only if the typist made a mistake — i.e., the handwritten scratch 61 is not subject to editing before typing. People v Martinez…, 13, 14, CtApp 2-18-14

 

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Appellate Review of Conviction Based Upon Circumstantial Evidence Explained

In a full-fledged opinion by Judge Pigott, the Court of Appeals determined there was sufficient circumstantial evidence to support defendant’s conviction, even though innocent explanations for the evidence could be offered. The court explained appellate review of circumstantial evidence:

…[I]t is well-established that “[t]he standard of appellate review in determining whether the evidence before the jury was legally sufficient to support a finding of guilt beyond a reasonable doubt is the same for circumstantial and non-circumstantial cases” … . That standard, of course, is whether, viewing the evidence in the light most favorable to the prosecution, “there is a valid line of reasoning and permissible inferences from which a rational jury could have found the elements of the crime proved beyond a reasonable doubt” … . A jury, faced with a case in which the proof of a particular charge, or element thereof, consists entirely of circumstantial evidence, “must exclude to a moral certainty every other reasonable hypothesis” … . But an appellate court's duty, when reviewing the jury's finding, is not to determine whether it would have reached the same conclusion as the jury, with respect to a proposed innocent explanation of the evidence (see Grassi, 92 NY2d at 699 [“Defendant has offered myriad innocent explanations or inferences that could be drawn by a jury to counter this evidence. That, however, is not the legal standard by which this Court is bound for reviewing a sufficiency of the evidence appeal”]). Rather, the appellate court, viewing the evidence in the light most favorable to the People, must decide whether a jury could rationally have excluded innocent explanations of the evidence offered by the defendant and found each element of the crime proven beyond a reasonable doubt. People v Reed, 3, CtApp 2-13-14

 

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No Constitutional Right to a Sua Sponte Inquiry Into Defendant’s Mental Health Before Allowing Defendant to Proceed Pro Se

In a full-fledged opinion by Judge Graffeo, the Court of Appeals acknowledged that a defendant may be competent to stand trial but not competent to proceed pro se, but determined the trial court did not violate defendant’s constitutional rights by not conducting a sua sponte inquiry into his mental health when he asked proceed pro se:

Defendant submits that [Indiana v Edwards (554 US 164 [2008])] requires states to adopt a two-tiered competency standard — a baseline for competency to stand trial and a separate, heightened standard for competency to proceed pro se at trial — and compels a competency hearing before a defendant may be permitted to proceed pro se. But we do not view Edwards as imposing such a requirement — and our interpretation is in accord with the federal appellate courts that have addressed the issue … . Although a court has discretion to require representation by counsel in certain circumstances despite a request to proceed pro se, it does not follow that the Constitution is offended if that discretion is not exercised. People v Stone, 5, CtApp 2-13-14

 

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Two-Year Time Limit On Bringing Suit Against Insurer for Cost of Replacement of Damaged Property Unreasonable If Replacement Cannot Reasonably Be Done Within Two Years

In a full-fledged opinion by Judge Smith, the Court of Appeals, in answering a question posed by the Second Circuit, determined a two-year time-limit on bringing suit against an insurance company was unreasonable because suit could not be brought until the damaged property was replaced. Therefore, as was true in this case, if the damage-repair takes longer than two years, the insured cannot sue for payment:

“[A]n agreement which modifies the Statute of Limitations by specifying a shorter, but reasonable, period within which to commence an action is enforceable” … . We conclude that the contractual period at issue here — two years from the date of “direct physical loss or damage” (i.e., from the date of the fire) — is not reasonable if, as the Second Circuit's question requires us to assume, the property cannot reasonably be replaced within two years.It is true, as the District Court pointed out, that there is nothing inherently unreasonable about a two-year period of limitation. In fact, we have enforced contractual limitation periods of one year … . The problem with the limitation period in this case is not its duration, but its accrual date. It is neither fair nor reasonable to require a suit within two years from the date of the loss, while imposing a condition precedent to the suit — in this case, completion of replacement of the property — that cannot be met within that two-year period. A “limitation period” that expires before suit can be brought is not really a limitation period at all, but simply a nullification of the claim. It is true that nothing required defendant to insure plaintiff for replacement cost in excess of actual cash value, but having chosen to do so defendant may not insist on a “limitation period” that renders the coverage valueless when the repairs are time-consuming. Executive Plaza LLC v Peerless Insurance Company, 2, CtApp 2-13-14

 

Defendant Entitled to Jury Charge on Extreme Emotional Disturbance Despite Lack of CPL 250.10 Notice

In a full-fledged opinion by Judge Abdus-Salaam, the Court of Appeals determined the defendant’s request for an “extreme emotional disturbance” jury charge should have been granted, in spite of the defendant’s withdrawing his CPL 250.10 notice re:  offering mental health evidence. At trial the defendant did not introduce any evidence of or cross-examine any witness about the defendant’s mental state. The evidence of defendant’s mental state was contained in defendant’s videotaped confession, which was presented at trial by the People. Because the CPL 250.10 notice concerns only mental-state evidence “offered” by the defendant, the absence of the notice did not preclude the extreme-emotional-disturbance jury charge:

A defendant is entitled to a jury charge on EED where the evidence, viewed in the light most favorable to the defendant, is sufficient for the jury “to find by a preponderance of the evidence that the elements of the affirmative defense are satisfied” … . Accordingly, the trial court must grant the defendant's request for an EED charge if the jury could reasonably conclude from the evidence that, at the time of the homicide, the defendant “was affected by an extreme emotional disturbance, and that [the] disturbance was supported by a reasonable explanation or excuse rooted in the situation as he perceived it” … . This is true even if the “[d]efendant did not testify or otherwise present evidence” and the “request for an extreme emotional disturbance charge [i]s based entirely on proof elicited during the People's case” … . * * *

In its present form, CPL 250.10 requires notice when a defendant “inten[ds] to present psychiatric evidence” … , which the statute broadly defines as “[e]vidence of mental disease or defect to be offered by the defendant in connection with the affirmative defense of,” as relevant to this appeal, “extreme emotional disturbance” … . The Legislature did not specify what qualifies as mental health evidence “offered by the defendant”; however, to “offer evidence,” as that legal phrase is traditionally understood, means to put forth evidence and “demand its admission” (Black's Law Dictionary 1081 [6th ed 1991]; see Black's Law Dictionary [9th ed 2009], proffer [“To offer or tender (something, esp. evidence) for immediate acceptance”]). Additionally, the frequently used meaning of “present” is “to bring or introduce into the presence of someone” (MerriamWebster's Collegiate Dictionary 982 [11th ed 2003]). The Legislature's use of these “active” terms suggests that it intended the notice requirement to apply where the defendant affirmatively seeks to admit psychiatric evidence in support of an EED defense. People v Gonzalez, 12, CtApp 2-13-14

 

Proof Sufficient to Support Unlawful Surveillance Conviction/Defendant Was Standing on the Front Door Step Videotaping Woman Inside

The Court of Appeals, in a full-fledged opinion by Judge Lippman, determined the proof was legally sufficient to support defendant’s “unlawful surveillance” conviction. Defendant videotaped a woman who was in her bathroom with the door open on the second floor of her townhouse. The defendant was standing on the front door step of the woman’s townhouse holding a video camera over his head in front of a small decorative window in the front door. The court determined that defendant’s actions, at 7:30 a.m. on December 24, could be deemed “surreptitious” within the meaning of the statute, even though he was potentially visible to the public while he was videotaping:

Here, viewing the evidence in the light most favorable to the People, defendant's conduct was surreptitious in nature. Although he was standing on complainant's front step, potentially exposed to public view, it was at 7:30 a.m. on Christmas Eve. The argument that defendant's conduct was completely out in the open, for anyone who happened by to see, is undermined given the pre-dawn hour.* Moreover, defendant was holding the small black camera in his black-gloved hand. In addition, he apparently had to hold the camera over his head, in the air, in order to get the proper angle and used the zoom function. Under the circumstances, there is legally sufficient evidence that defendant was acting in a furtive or stealthy manner, attempting to obtain the video of complainant without being discovered — in other words, that he was acting surreptitiously. People v Schreier, 4, CtApp 2-13-14

 

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Employer Which Hired Undocumented Workers Who Were Injured On the Job Protected from Suit by the Workers’ Compensation Law

In a full-fledged opinion by Judge Smith, the Court of Appeals determined the employer [Microtech] was entitled to the protection of the Workers’ Compensation Law and a suit against the employer by the hospital (which paid out Labor Law claims to the injured workers) was properly dismissed. The employer had hired undocumented workers [the Lemas] who were injured doing demolition work at the hospital. The workers were paid Workers’ Compensation benefits by the employer. The workers sued the hospital under the Labor Law and were awarded a verdict. The hospital then sued the employer which, the Court of Appeals held, was protected from suit by section 11 of the Workers’ Compensation Law:[Quoting the appellate division, the Court of Appeals wrote:]

…[T]o rule in the hospital's favor would “effectively deny [Microtech] the economic protections it acquired under the Workers' Compensation Law in return for providing [the Lemas] with compensation for their injuries,” as well as “relieve [the hospital] of its responsibility to ensure a safe construction site for workers under the Labor Law”… . New York Hospital Medical Center of Queens v Microtech Contracting Corp, 1, CtApp 2-13-14

 

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